THE NINETY-FOUR OF 1994; PART 2 OF 14

Desperately seeking suitor. Fresh from a restructuring, Kemper Corp. Chairman David Mathis slammed the door on General Electric Co.'s hostile, $60-per-share cash bid. Mr. Mathis said he wanted better and jumped into the arms of Carmel, Ind.-based insurer Conseco Inc. for $67 per share in cash and stock, only to see the deal crumble.

Now, Kemper is shopping itself to potential suitors, including SunAmerica Corp., Chubb Corp., Dean Witter Discover and (wonders never cease) General Electric. But with interest rates rising and prices for money management businesses softening, Mr. Mathis isn't likely to win anything close to the $70 a share he once sought. Instead of selling Kemper for a respectable premium and floating away in a $6.2-million golden parachute to run Kemper National Insurance Cos., Mr. Mathis more likely will find himself defending Kemper from lawsuits lodged by irate shareholders.

8

The return of hostile takeovers. Emboldened by a robust economy and a new confidence to finance deals, corporations cribbed from the raiders of the 1980s and institutionalized the hostile takeover game. Besides Kemper Corp., local targets have included Santa Fe Pacific Corp., Katy Industries Inc., Mark Controls Corp. and Unitrin Inc. (The last purchased its stock to fend off a $2.6-billion bid for its lucrative door-to-door insurance business by Houston insurer American General Corp.)

The fight for Santa Fe has been particularly juicy. Press releases touting a friendly merger between the Schaumburg-based railroad and Burlington Northern Inc. of Texas had barely cooled when competitor Union Pacific Corp. heated things up with an unwanted bid for Santa Fe. Dang if Union Pacific didn't keep offering Santa Fe shareholders more money than Burlington Northern would. After strong initial resistance, Santa Fe CEO Robert Krebs finally agreed to discuss Union Pacific's $3.2-billion offer. But the fight's not over: Mr. Krebs is stoking the coals for a possible leveraged buyout.

9

Casinos-a-no-no. There was no shortage of interest in bringing casino riverboats to Chicago and suburban Cook County. No shortage of fat cat investor groups. And no shortage of city locations for the boats to drop anchor, though the odds appear to favor a site on the Chicago River's South Branch.

But . . . no action, thanks to a standoff between House Majority Leader Mike Madigan and Senate Majority Leader James "Pate" Philip. Arlington International Racecourse owner Richard L. Duchossois added more drama, holding his breath and threatening to close his pony track for 1995 because he hasn't gotten a casino in landlocked Arlington Heights. All this while gambling boats were approved in Indiana. Looks like Cook County will be surrounded by a ring of slot machines, roulette wheels and crap tables for the foreseeable future.

10

Quaker's big gulp. Quaker Oats Co. wants to spend $1.7 billion to swallow Snapple Beverage Corp.-a natural move, argued Quaker Chairman William Smithburg, predicting that the buy will produce another highly profitable Gatorade-level brand name over the next few years and turn the company into the country's third-largest marketer of soft drinks.

Sun-Times headlines. Chicago's No. 2 metro paper and its suburban chains were purchased for $180 million by American Publishing Co., the U.S. arm of Canadian media mogul Conrad Black's Hollinger Inc. of Vancouver. The folks from the Great White North brought financial stability to a tabloid almost overwhelmed by debt from its previous leveraged buyout and the recession of the early 1990s. But they're tough guys on the bottom line: Witness the swift exits of much of Chicago Sun-Times top management, including Publisher Sam McKeel.

A subplot: the nasty little showdown between the Chicago Newspaper Guild and management, which took the paper (again) to the brink of a work stoppage before everyone made nice and signed on the dotted line. The labor negotiations led sharp-tongued American Chairman F. David Radler to characterize guild members as "sheep" for following the dictates of union officials. Mr. Radler never is anything less than blunt. In August, the tightfisted chairman was asked about rumors of 200 jobs being cut at the Sun-Times. "I wish it was true," Mr. Radler replied. "It's not."

12

Hafta NAFTA. Many thought GATT was just a General Agreement to Talk and Talk, but now, the world trade pact is nearly a done deal, with relatively little fuss and controversy. In part, it's because that "giant sucking sound" many expected to hear when the North American Free Trade Agreement went into effect this year turned out to be a big sigh of relief: The latest data show that U.S. exports to Mexico are up 21.5%, while they're up 46.3% from Illinois alone.

If anything, this was a tough year for the kickoff of a new trade agreement, what with two high-level political assassinations in Mexico, a south-of-the-border recession and a sinking peso. Combine that with an inordinate amount of paperwork snafus and squabbles over customs regulations, and it's reasonable to expect that next year will be even better.

Mr. Perot, go back to computers, willya?

13

Here's your damn mail. For years, members of Congress have called meetings, issued press releases and said something has to be done, really, about the poor quality of postal service in the Chicago area. While the system has been under fire, it wasn't until thousands of parcels of mail were found burning under a city viaduct that officials started to feel the heat.

That's one way to deal with junk mail. But Postmaster General Marvin Runyon agreed it should be delivered first. Letter carriers worked overtime-at $32 an hour-to catch up on the backlog. And top postal officials in Chicago were rerouted.

On-time deliveries improved, but by mid-September, they began slipping, due to start-up problems at a new distribution facility on the North Side. Of course, first-class stamps are going up to 32 cents next year. If you think you've seen a 10% improvement in mail service, write us a letter-we'd love to hear about it. Just to be on the safe side, better fax it.

14

Brinson in clover, over and over. Money manager Gary Brinson again proved he's no slouch in knowing when to buy low and sell high, peddling his Brinson Partners Inc. to Swiss Bank Corp. in late summer for $750 million in stock. Deal of the year? Try deal of the decade. Mr. Brinson led a buyout of his operations from First Chicago Corp. in 1989, paying $70 million cash and $15 million in debt and giving the bank company a 10% stake in his new firm. The return on the 90% held by Mr. Brinson and other shareholders comes to roughly 700% over five years.

The 51-year-old Mr. Brinson (already renowned in investment circles for pulling funds out of the stock market shortly before the 1987 crash) isn't cashing out and heading for the south of France, at least for now. He and other partners signed up for an 11-year "earn-out" as part of the Swiss Bank buyout.